Since inception eight years ago, BioSig Technologies (BSGM) has gone nowhere fast ... unless you count issuing stock, regurgitated news and stock promotions as achievements.
BioSig is a non-revenue, cash-gobbling Minneapolis, Minnesota company focused on a non-FDA-approved product. The PURE EP System is designed to display data during an electrocardiogram or EKG.
As the market completely misses the huge red flags snapping at BioSig, the stock has darted upward by ~18% in a month. Now this dangerous stock has reached a level that we believe leaves only downside ahead.
TheStreetSweeper presents the top risks that challenge a BioSig investment:
*1. Promote, Promote, Promote
Yesterday morning, many folks' inboxes were treated to this Bio Sig come-on:
The next BioSig promo surge came just a couple of hours later:
Here's more hype that landed in the morning's email:
And another one:
These emails are paid promotions. Just the kind of thing you'd never see trumpeting a stable company with viable products. An attached disclosure warns:
Those promos are just the latest. Since April 2015, the company has been the subject of at least 22 promotional campaign blasts!
These promotions are not cheap. They come in at $5,000, $6,000 or $15,000 a pop.
Who pays for this advertising?
Why, third parties with hearts of gold.
*2. Regurgitated News
But wait. The promotions aren't over. BioSig ran what we consider a pure promotion that landed on the company's Yahoo news feed yesterday morning, Jan. 19.
The "news" item is by AccessWire, which is in the business of churning out paid press releases and getting eyeballs on them.
The AccessWire report was written by non-broker SeeThruEquity, which discloses:
SeeThruEquity and/or its officers, directors or affiliates have in the past and may from time to time in the future receive compensation from companies featured in its reports for presenting at SeeThruEquity investor conferences, distributing press releases and performing certain other ancillary services.
Here's a snapshot from that BioSig promo:
Here's one part of that same promo:
This is regurgitated news.
That's right. The referenced journal report is old, old, old.
BioSig trumpeted the same two-page report ... co-authored by a BioSig consultant along with a co-patent holder/doctor who received consultant honoraria (voluntary fees) from 12 companies referenced in the article and possibly future royalties from five others ... in a paid Globe NewsWire release about a week earlier:
And BioSig touted the same thing back in August 2016.
This morning, the company released an old news shareholder letter that comes off as promotional.
BioSig must not have much going on if managers feel compelled to recycle old "news."
*3. Spend Baby, Spend
Meanwhile, BioSig recently spun out a $10.3 million loss ... a stockholder loss of 55 cents per share. Yet the company spends like it's loaded.
A truckload of money goes to consulting, investor relations and public relations.
Quarterly expenses for general and administrative costs hit nearly $1 million - $992,000. Nearly a quarter of that - $226,000 - went to consulting, public and investor relations fees.
Even though the company got $530,000 from two September stock offerings, the cash was burning fast.
(Sources: Company SEC filings, TheStreetSweeper)
Indeed, BioSig had hit over $42 million in accumulated losses ... despite a steady diet of stock sales.
Guess what happened next?....
*4. Selling Stock
So BioSig jumped out and offered more stock to certain investors.
That's right. With cash likely down to pennies, the company dashed out four sales of stock late last year. This produced about $2.38 million and increased shares outstanding by about 1.4 million.
The offerings gave BioSig enough cash to squeeze through another quarter.
But ahead are more quarters with million-dollar expenses. Actually the costs will likely increase greatly if the company intends to go after the 510(k) Food and Drug Administration authorization for sales this year. So far, the prototype has only been used in animal studies. Product refinement, human studies and possibly production and commercialization are likely many years down the road.
So what should we expect next? More stock sales and/or convertible debt, and more potential for diluting people's stock.
Propped up by numerous paid promotions and regurgitated "news," BioSig shares popped nearly 19% in the five last days of trading. But smoke can't hold up an entire company for long.
TheStreetSweeper expects this precariously positioned stock will quickly get chopped in half.
* Important Disclosure: The owners of TheStreetSweeper hold a short position in BSGM and stand to profit on any future declines in the stock price.
* Editor's Note: As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking financial positions in the companies that they cover. To contact Sonya Colberg, the author of this story, please send an email to firstname.lastname@example.org.